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4.
LU ACCEPTED ROGERS' COMMENT THAT IT WAS THE CHINESE WHO WERE NOW WANTING MUCH MORE THAN IN THE 1973 AGREEMENT WHILE THEY WERE OFFERING US VIRTUALLY. THE SAME AS BEFORE. HOWEVER, HE CONT- ENDED THAT IN THE 1973 NEGOTIATIONS WE HAD SECURED QUOTE SOME- THING FOR NOTHING UNQUOTE IN RESPECT OF HONG KONG: THEY WERE NOW NO LONGER PREPARED TO GIVE US ANY RIGHTS ON THE HONG KONG-PEKING SECTOR WITHOUT 03TAINING A MAJOR BENEFIT FOR THEMSELVES.
5. TURNING THE CONVERSATION, ROGERS SAID THAT IN THE INTERVAL SINCE THE PREVIOUS MEETING WE HAD WORKED OUT IN CONJUNCTION WITH
BA DETAILED COMMERCIAL PROPOSALS WHICH WE FELT FULLY MET LU'S POINTS (PARA 5 OF OUR TELNO 500 AND PARA 2B OF OUR TELNO 514) ABOUT THE SIZE OF THE HONG KONG-PEKING MARKET AND THE FACT THAT
CAAL WERE ALREADY CARRYING MOST OF THE EXISTING TRAFFIC ON THEIR PEKING-CANTON SERVICES. EXAMPLES HAD BEEN WORKED OUT IN DETAIL,
SHOWING THE EFFECTS OF OUR PROPOSALS AT VARIOUS LEVELS OF DEMAND, RANGING FROM LU'S OWN FIGURE OF 10,000 PASSENGERS PER YEAR (20,000 ONE WAY JOURNEYS) UP TO THE FORECAST OF ABOUT 82,000..ONE WAY JOURNEYS A YEAR WHICH BOTH BA AND CPA CONGIDER REALISTIC,
ROGERS TOOK LU THROUGH THESE CALCULATIONS STEP BY STEP AND
POINTED OUT THAT
A. AT ALL TRAFFIC LEVELS CAAC WOULD RECEIVE NOT LESS THAN THE
REVENUE CURRENTLY RECEIVED FROM CARRYING PASSENGERS ON THE
B.
C.
D.
CANTON-PEKING LEG.
AT ALL TRAFFIC LEVELS CAAC'S OPERATIONS ON THE HONG KONG- PEKING SECTOR WOULD BE PROFITABLE AFTER TAKING ACCOUNT OF
POOL PAYMENTS.
BA WOULD BE ACCEPTING THE RISK THAT IF THE TRAFFIC WAS AS LOW AS CAAC HAD FORECAST THEY WOULD BE OPERATING THE HONG KONG-
PEKING SECTOR AT A LOSS.
ON THE OTHER HAND, THE TRAFFIC WAS IN THE REGION OF 60,000 TO 83,262 ONE WAY JOURMEYS A YEAR BOTH AIRLINES WOULD BE OPERATING PROFITABLY AND POOL PAYMENTS ONE WAY OR THE OTHER
WOULD BE NEGLIGIBLE.
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